Guildwood Direct Limited, Also d/b/a Intermed Laboratories; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 962-3137]

Guildwood Direct Limited, Also d/b/a Intermed Laboratories;

Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair or deceptive acts or practices and unfair methods of

competition, this consent agreement, accepted subject to final

Commission approval, would prohibit, among other things, the New York-

based company from representing that any product causes weight loss,

with or without changes in diet or exercise, or provides any weight

loss, fat loss, weight regulation, weight control or weight maintenance

benefit, and from using the name ``Slimming Insoles'' or any other name

in a manner that represents that any product causes weight loss unless

the respondent possesses competent and reliable scientific evidence

that substantiates the representation. The consent agreement also would

prohibit the respondent from representing that Advance Bio/Natural

Research Labs in a bona fide, independent research organization or from

making any misrepresentations of the existence, contents, validity,

results, conclusions or interpretations of any test, study or research

or the existence, nature, purpose or activities of any organization. In

addition, the consent agreement would require the respondent to pay, to

purchasers of the Slimming Insoles, $40,000 for consumer redress or

disgorgement, with that liability being suspended upon payment of

$7,500 once the order becomes final.

DATES: Comments must be received on or before June 6, 1997.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Richard Cleland, FTC/H-482, Washington, D.C. 20580. (202) 326-3088.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the above-captioned consent agreement containing a consent

order to cease and desist, having been filed with and accepted, subject

to final approval, by the Commission, has been placed on the public

record for a period of sixty (60) days. The following Analysis to Aid

Public Comment describes the terms of the consent agreement, and the

allegations in the complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home page

(for March 25, 1997), on the World Wide Web, at ``http://www.ftc.gov/

os/actions/htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, N.W.,

Washington, D.C. 20580, either in person or by calling (202) 326-3627.

Public comment is invited. Such comments or views will be considered by

the Commission and will be available for inspection and copying at its

principal office in accordance with Section 4.9(b)(6)(ii) of the

Commission's Rules of Practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order

The Federal Trade Commission has accepted an agreement to a

proposed consent order from Guildwood Direct Limited (``respondent'').

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement or make final the agreement's proposed

order.

The Commission's complaint in this matter charges respondent with

deceptively advertising Slimming Insoles, insoles worn in the shoes

that purportedly cause weight loss through ``reflexology,'' without

changes in diet or exercise. According to advertisements for the

product, the Slimming Insoles purportedly cause weight loss by

massaging certain ``reflex points'' on the bottom of the foot during

the course of a normal day's walking, thereby stimulating the body's

digestive system to burn stored fat and cause weight loss.

Advertisements for the product appeared in newspapers such as the

Washington Post, New York Post, Denver Post and St. Louis Post, in

newspaper inserts, in magazines such as American Women, Soap Opera

Update and Woman's Own as well as in nationwide direct mailings.

The complaint alleges that, through the product name ``Slimming

Insoles'' and the advertisements, respondent made unsubstantiated

representations that the Slimming Insoles cause significant weight loss

and that the weight loss occurs without changes in diet or exercise.

According to the complaint, the ads also claim, without

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adequate substantiation, that testimonials from consumers appearing in

the ads reflect the typical or ordinary experience of people who have

used the product.

The complaint also alleges that respondent falsely represented that

scientific studies demonstrate that the Slimming Insoles cause

significant weight loss without changes in diet or exercise. In

addition, the complaint alleges that respondent falsely represented

that an organization named Advanced Bio/Natural Research Labs is a bona

fide, independent research organization that has published a report

containing the results of valid, independent testing of the Slimming

Insoles.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent respondent from engaging in

similar acts and practices in the future.

Part I of the order requires respondent to possess competent and

reliable scientific evidence to support any claim that any product

causes weight loss, with or without changes in diet or exercise, or

provides any weight loss, fat loss, weight regulation, weight control

or weight maintenance benefit. Part II prohibits respondent from using

the name ``Slimming Insoles'' or any other name in a manner that

represents that any product causes weight loss, unless respondent

possesses competent and reliable scientific evidence that substantiates

the representation.

Part III prohibits respondent from claiming that the experience

represented in any user-testimonial or endorsement of any food, dietary

supplement, drug, device, or weight loss product or program represents

the typical or ordinary experience of members of the public who use the

product, unless, at the time, respondent possesses and relies upon

competent and reliable scientific evidence substantiating the

representation or respondent discloses, clearly and prominently, and in

close proximity to the testimonial or endorsement, what the generally

expected results would be or that consumers should not expect to

experience similar results.

Part IV prohibits respondent from representing that Advance Bio/

Natural Research Labs is a bona fide, independent research organization

or that it has published a report containing the results of valid,

independent testing of any product. Part V prohibits, in connection

with the sale of any food, dietary supplement, drug, device or weight

loss product or program, misrepresentations of the existence, contents,

validity, results, conclusions or interpretations of any test, study or

research or the existence, nature, purpose or activities of any

organization.

Part VI requires respondent to deposit $40,000 into an escrow

account, which will be used by the Commission to provide either direct

redress to purchasers of the Slimming Insoles or will be paid to the

United States Treasury, if the Commission determines that direct

redress to consumers is wholly or partially impracticable. The order

suspends the full $40,000 liability, however, provided that respondent

pays $7,500 to the Commission no later than the date the order becomes

final. The full $40,000 becomes due, however, should respondent default

in making the $7,500 payment. In addition, the Commission's acceptance

of the order is expressly premised upon financial statements and

related documents provided by the respondent, and the Commission

reserves the right to re-open the proceeding to determine if the

financial information provided by respondent contains any material

misrepresentations or omissions. If the Commission determines that

there are any material misrepresentations or omissions in the financial

information provided, then the full $40,000 becomes due and payable.

Parts VII through X relate to respondent's obligations to maintain

and make available to the Commission certain records; to provide copies

of the order to respondent's personnel; to notify the Commission of

changes in corporate structure; and to file compliance reports with the

Commission. Part XI provides that the order will terminate after twenty

years, under certain circumstances.

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not intended to constitute an official

interpretation of the agreement and proposed order or to modify in any

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 97-8800 Filed 4-4-97; 8:45 am]

BILLING CODE 6750-01-M